Barbarian At The Gate: Liberty Global (LBTYA)

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer.

Trade-Ideas LLC identified Liberty Global ( LBTYA) as a "barbarian at the gate" (strong stocks crossing above resistance with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified Liberty Global as such a stock due to the following factors:

  • LBTYA has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $137.3 million.
  • LBTYA has traded 4.6 million shares today.
  • LBTYA traded in a range 257.7% of the normal price range with a price range of $2.65.
  • LBTYA traded above its daily resistance level (quality: 442 days, meaning that the stock is crossing a resistance level set by the last 442 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Barbarian at the Gate' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying positive price action. In this case, the stock crossed an important inflection point; namely, 'resistance' while at the same time the range of the stock's movement in price is more than twice its normal size. This large range foreshadows a possible continuation as the stock moves higher.

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More details on LBTYA:

Liberty Global plc, together with its subsidiaries, provides video, broadband Internet, fixed-line telephony, and mobile services in Europe, Chile, Puerto Rico, and internationally. Currently there are 9 analysts that rate Liberty Global a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for Liberty Global has been 1.8 million shares per day over the past 30 days. Liberty Global has a market cap of $13.1 billion and is part of the services sector and media industry. The stock has a beta of 1.87 and a short float of 2.6% with 3.18 days to cover. Shares are up 5.8% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Liberty Global as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, expanding profit margins and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income and generally higher debt management risk.

Highlights from the ratings report include:
  • Despite its growing revenue, the company underperformed as compared with the industry average of 4.2%. Since the same quarter one year prior, revenues slightly increased by 3.3%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • The gross profit margin for LIBERTY GLOBAL PLC is rather high; currently it is at 62.46%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of -11.34% is in-line with the industry average.
  • Net operating cash flow has slightly increased to $1,542.70 million or 5.28% when compared to the same quarter last year. Despite an increase in cash flow, LIBERTY GLOBAL PLC's average is still marginally south of the industry average growth rate of 15.01%.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Media industry. The net income has significantly decreased by 331.8% when compared to the same quarter one year ago, falling from -$121.20 million to -$523.40 million.
  • Although LBTYA's debt-to-equity ratio of 3.14 is very high, it is currently less than that of the industry average. Along with this, the company manages to maintain a quick ratio of 0.29, which clearly demonstrates the inability to cover short-term cash needs.

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